BB maintains tight monetary policy to curb inflation

Staff Reporter :

With controlling inflation remaining its top macroeconomic priority, Bangladesh Bank has unveiled the monetary policy for the January–June period, largely continuing the approach of previous cycles.

The central bank has kept the policy interest rate unchanged, signaling that no easing will occur until inflation reaches the targeted level of around 7 percent.

According to the latest figures, point-to-point inflation rose to 8.58 percent in January from 8.29 percent in December.

Economists see little chance of inflation easing in the first quarter due to election-related factors, prompting the central bank to focus on curbing further price pressures over the next two months.

This strategy was outlined during the monetary policy announcement at the central bank headquarters on Monday. Governor Dr. Ahsan H. Mansur noted that while the policy has performed well across most indicators, inflation remains a challenge.

“We have done well indeed, we have done our best. Only inflation has not been brought under full control,” he said. Nevertheless, he expressed optimism that improving global economic conditions and domestic stability would gradually bring inflation down.

Addressing concerns over unmet targets, Dr. Mansur emphasized that it would be unreasonable to penalize the policy for one area falling short.

“That is why we are keeping the policy rate unchanged,” he said, highlighting that foreign exchange reserves have been steadily rising and have met IMF conditions since August last year an unprecedented achievement.
He added that maintaining higher interest rates has helped stabilize the exchange rate, supporting increased inflows of foreign currency, including remittances.
The IMF has also recommended that the policy rate remain unchanged until inflation falls below 7 percent, guidance echoed in the latest policy review.
Under the new framework, the policy rate remains at 10 percent, the Standing Lending Facility (SLF) rate at 11.5 percent, while the Standing Deposit Facility (SDF) rate has been slightly reduced from 8 percent to 7.5 percent.
Private sector credit growth is projected at 8.5 percent, up from 7.2 percent previously, though actual growth stood at 6.10 percent as of December.
Bangladesh Bank has pursued a contractionary monetary policy for over a year. Inflation surged into double digits in late 2022 and peaked at 11.66 percent in July 2024.
Tighter measures under the interim government gradually lowered inflation to 8.17 percent in October 2025.
However, inflation has risen again for three consecutive months, reaching 8.58 percent in January, underscoring the ongoing challenge for policymakers.